2017 (9) TMI 27 - AT - Service Tax

Classification of services - appellants are engaged in providing certain services with reference to water pipelines of Delhi Jal Board - whether the said service falls under the category of Management, Maintenance or Repair Services? - Held that - the definition of Management, Maintenance or Repair Services covers reconditioning or restoration or servicing of any goods - Though the appellant did restoration, reconditioning servicing work of water pipelines, the same is not with reference to any goods. Since the scope of contract is clear, this will not fall under the category of a general maintenance or repair of properties - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of service tax liability under "Management, Maintenance or Repair Services" as per Section 65(64) of the Finance Act, 1994 based on the work executed by the appellants.

Analysis:
The appellants were engaged in providing services related to water pipelines of Delhi Jal Board, and the dispute arose regarding the taxability of their services under the category of "Management, Maintenance or Repair Services" as defined under Section 65(64) of the Finance Act, 1994. The Revenue contended that the services provided fell under this category, resulting in a service tax liability of ?19,25,459 along with penalties imposed under Sections 77 and 78 of the Finance Act, 1994. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The key contention raised by the appellant was that the services provided did not fall under the category (c) of the tax entry which deals with maintenance or repair of goods. The appellant argued that the work order specifically outlined activities such as cleaning, scouring, and restoration of water pipelines, which were not goods as they were embedded into the earth and not removed by the appellants. The appellant emphasized that the cleaning and restoration activities were essential as per the terms of the work order and did not involve handling goods.

On the other hand, the Revenue argued that the service tax liability should be covered under category (b) of the tax entry, which pertains to maintenance or repair of properties, whether immovable or not. The Revenue contended that the activities carried out by the appellants aligned more closely with this category.

After hearing both sides and examining the appeal records, the Tribunal analyzed the scope of work outlined in the work order. It was noted that the appellants were tasked with activities such as scrubbing, clearing, and disinfecting water pipelines, along with cutting and restoring them without physically moving or dismantling the pipelines. The Tribunal emphasized that the definition of "management, maintenance or repair" under Section 65(64) of the Finance Act, 1994 specifically includes reconditioning or restoration of goods. However, since the activities of the appellants did not involve handling goods but rather focused on maintaining and restoring embedded pipelines, the Tribunal concluded that the services provided did not fall under the tax entry category as confirmed by the lower authorities.

Therefore, based on the analysis of the work carried out by the appellants and the specific provisions of the tax entry, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellants.